VFEX listings gather momentum





THE Victoria Falls Stock Exchange (VFEX) is experiencing a hive of activity, with multiple listings expected during the quarter to December 31, 2022, as the bourse continues to excite businesses with its foreign currency trading.

Quick service restaurant group Simbisa Brands Limited was last week scheduled to complete its listing on the exchange, while Karo Mining House is expected to list its bond to raise US$50 million on December 14, 2022, with the proceeds set to partly fund its open pit asset located in the Great Dyke.

This comes as businesses are struggling to raise capital for various projects and, therefore, turning to the US dollar-denominated exchange in an effort to raise capital.

Simbisa becomes the fifth counter on the VFEX after Bindura, Caledonia, Padenga and Seed Co International, with more listings expected as businesses migrate from the main bourse — the Zimbabwe Stock Exchange (ZSE) — in a move that market watchers say will boost companies’ international profiles.

Simbisa said the migration to VFEX is expected to help raise working capital for the fast food chain, which has a line-up of expansion projects in the next two financial years.

“The benefits of the proposed transaction include, but are not limited to, the following: capital markets deepening through a broader shareholder base and ability to raise capital in foreign currency; offshore settlement allowances lowering exchange control risks; lower trading costs of 2,12 percent compared to 4,63 percent on the ZSE may improve the shares’ liquidity; and tax incentives for shareholders, including a 5 percent withholding tax on dividends and no capital gains tax on share disposal,” said Simbisa.

Food processor National Foods Holdings Limited is also expected to debut on the VFEX on December 23, 2022 after delisting from the ZSE.

Micro-finance services provider GetBucks is also trading under a cautionary notice, as it announced its board approved plans to delist from the ZSE and list on the VFEX.

Last month, the VFEX also witnessed the listing of Nedbank Zimbabwe Depository Receipts, affording shareholders and investors exposure to the Nedbank Group, which was solely listed on the Johannesburg Stock Exchange (JSE).

Restructuring

The Nedbank ZDR comprises local Old Mutual Limited investors’ unbundled Nedbank shares.

This comes as the financial services giant (Old Mutual) finalised a restructuring exercise in 2021, which resulted in shareholders receiving a stake in Nedbank for their shares held in Old Mutual.

This applied to shareholders in Zimbabwe and London, where it is also listed.

Locally, Old Mutual was suspended from the ZSE in 2020, together with other dually listed firms – PPC and Seed Co International – although the latter was eventually listed on the VFEX.

“Old Mutual investors in Zimbabwe have faced several challenges in trading the JSE-listed Nedbank shares. ZDRs, therefore, emerged as an apt solution for such investors,” said Morgan & Co Research.

According to the stockbrokers, depository receipts’ key advantages include exposure to foreign assets, low trading costs and quick settlement, although liquidity challenges may be a damper.

Morgan & Co said: “However, we identify liquidity risk as a major disadvantage of the ZDRs.”

As of November, Caledonia ZDRs had traded 1 603 shares since they listed on the VFEX last year.

Generally, experts in the capital markets forecast more activity with companies expected to leave the primary bourse – ZSE – where they are undervalued.

Listing on the VFEX will also allow them to have forex valuations and be more attractive to investors.

Meanwhile, Treasury also plans bond issuances of US$100 million on the VFEX.

The bond issuance will be in tranches, specifically for infrastructure development targeting road rehabilitation and irrigation infrastructure. – Sunday Mail




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